What to Watch in The Week Ahead and on Monday, May 12

Reuters Staff

8 Min Read

(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) WEEK AHEAD Federal Reserve Chair Janet Yellen is the main focus this week for U.S. central bank watchers, airing her latest views on the state of the economy and small businesses, a traditional driver of job creation, when she speaks in Washington on Thursday. The centrist chief of the Atlanta Fed, Dennis Lockhart, and the hard-to-classify James Bullard, who heads the St. Louis Fed, are also among top Fed officials taking to the podium this week to talk about the Fed’s next steps as it slowly retreats from its unprecedented stimulus amid a firming - but still far-from-robust- job market. Retail sales, manufacturing and housing data next week will show strength in the economy early in the second quarter. The Commerce Department is expected to report on Tuesday that retail sales increased 0.4 percent in April and a gauge of consumer spending gained 0.6 percent. Inflation reports from the Labor Department are expected to show little price pressure in the economy. Consumer prices are seen increasing 0.2 percent in April after rising by the same margin in March. The producer price index for final demand is seen increasing 0.2 percent, slowing from a rise of 0.5 percent in March. On Thursday, the Federal Reserve is expected to report that factory output increased 0.3 percent in April. A decline in demand for utilities as temperatures rise, however, likely curbed industrial output. Commerce Department data on Friday is expected to show housing starts increased to a 983,000-unit pace in April, while permits rose to a 1-million unit rate. Dow 30 component Walmart is expected to report first-quarter results on Thursday. To combat sluggish sales, broaden its customer base and fend off aggressive rivals, the retailer is opening new small format stores and investors will be keen to hear how those locations have performed. They will also be looking for details on the company’s new money transfer business, which is expected to drive traffic at its stores. According to StarMine, analysts expect the company to miss both profit and sales estimates for the first quarter. Retailers Nordstrom and Kohl’s are also expected to post first-quarter results on the same day. Cisco, scheduled to report third-quarter results on Wednesday, had earlier forecast a revenue slide in the quarter, underlining its struggle to rekindle demand in emerging markets like China even as hardware spending globally sags. Deere & Co, the world’s largest maker of tractor, harvesters and other agricultural equipment, had warned that demand for its products would fall in most markets following a bumper crop that sent commodity prices lower. Analysts expect crop receipts to fall 10 percent or more this year when the company reports second-quarter results on Wednesday. Analysts expect modest first-quarter sales growth when Macy’s reports results on Wednesday. The department store operator, like other U.S. retailers, is likely to have been hit by the persistent cold weather. After posting weaker-than-expected comparable sales for the fourth quarter, Macy’s CEO had said business would return to normal once the weather improved and the company left its full-year forecast unchanged. Investors will be eager to see whether the company continues to stand by this guidance. Chip equipment maker Applied Materials is scheduled to post fiscal second-quarter results on Thursday and investors will be looking for new signs of a slowdown in the smartphone market. Strong demand for mobile gadgets in recent years has offset weak spending on manufacturing equipment by PC chipmaker Intel. But signs that the smartphone industry is now losing steam may put pressure on on the contract chipmakers that buy Applied Materials’ tools. Advance Auto Parts is scheduled to report first-quarter results on Thursday. The retailer of automotive parts to the replacement industry is likely to have gotten a boost from a harsh winter in the first quarter. Investors will be looking for details on the progress of General Parts International’s integration into Advance Auto. Struggling department store operator J.C. Penney is scheduled to report first-quarter results on Thursday after a surprisingly good holiday quarter, in which both sales and margins rose amid a highly promotional environment. The company has since been upbeat about its transformation efforts and said it expects same-store sales to rise as much as 5 percent by 2015. All eyes, however, will be on the performance of its overhauled home goods section and Wall Street will also be looking out for updates on the performance of other turnaround initiatives. Autodesk, which makes computer-aided design software, is expected to report strong first-quarter results on Thursday, helped by higher subscriptions and higher sales of its software suites. The company, like software maker Nuance, is in the process of transitioning to a subscription-based business model. The world’s largest ammunition maker, Alliant Techsystems, is expected to report fourth-quarter results on Thursday. It has focused on growing its sporting business as its defense unit stays weak due to lower military spending. The sporting business is expected to account for about 45 percent of total revenue once the company’s purchase of gun accessories company Bushnell is fully integrated. Analysts are also expecting Alliant’s aerospace business to grow, helped by strong demand from commercial aircraft makers. Solar panel maker Canadian Solar is expected to post a quarterly profit for the third straight quarter when it reports first-quarter results on Friday, as demand from the United States and Japan keeps improving. But China was subdued in the first quarter due to seasonal weakness. Weak panel prices are also likely to continue to weigh on the company’s results. Investors will be looking for details on the solar power plant business and the company’s plans to spin off some plants into a separate, publicly-listed company. Canada’s report on March factory sales, due on Thursday, is expected to show a 1.4 percent increase from February, when manufacturers registered their highest sales since the pre-recession peak in July 2008. The data should help shed light on the export sector, which is still struggling despite strengthening demand from the U.S. market. On Wednesday, Bank of Canada Deputy Governor Lawrence Schembri speaks to a pension industry group. Market players will be watching for signs that the central bank is more cautious in its outlook after disappointing export and employment data. Chinese online cosmetics retailer Jumei International Holding and car comparison website TrueCar are scheduled to make their trading debuts on Friday. Jumei, backed by venture-capital firm Sequoia Capital, is looking to raise up to $203 million by offering 9.5 million American Depositary Shares at $19.50-$21.50 per ADS. TrueCar is looking to raise up to $109 million by offering 7.78 million shares at $12-$14 per share. At the top end of the expected price ranges, Jumei would be valued at a little over $3 billion and TrueCar would be valued at about $1 billion. MONDAY, MAY 12 Drug wholesaler McKesson, part of the recent trend of U.S.-European healthcare mergers with its acquisition earlier this year of Germany’s Celesio, is scheduled to report fourth-quarter earnings. Turquoise Hill Resources, which owns the Oyu Tolgoi copper and gold mine in Mongolia, reports earnings for the first quarter. Analysts expect a loss of 2 cents a share. Turquoise Hill is 51-percent owned by global miner Rio Tinto, and owns 66 percent of the Oyu Tolgoi mine, with the rest owned by the Mongolian government. The Canadian company said in March that full-year production at the mine may be lower than previously forecast. (Compiled By Ayesha Sruti Ahmed in Bangalore)